China: New coal plants mushrooming despite energy glut

Around four coal-powered plants are poised to come up every week in China. However, chances are they will remain under-utilised given the existing glut.

The huge investment involved comes to over £300m on a plant. Around 155 projects with a total capacity of 123gw got the green signal in 2015 alone. This is despite the fact that China has practically no need for the energy they will produce.

The approvals are a direct fallout of the decision to decentralise authority to approve coal plants. They come at a time when overcapacity in generation by 25% has led to a 50% fall in coal plant utilisation in the year.

The continued investment does not mean locking in more coal burning, but a massive economic waste and a lost opportunity to invest in renewable energy beyond the pledged 15% for 2020, says a Greenpeace report.

Writing about the "Coal power bubble" Greenpeace East Asia calls it an investment bubble driven by distortions in power market and investment decisions, and driven by the Chinese economy's adherence to debt-fuelled spending. Almost 50% of China's GDP is accounted by spending on power plants, factories, real estate and infrastructure.

With 100 large plants set up in the last 12 months, China's thermal power capacity has increased by 60gw while generation has fallen by 2%, indicating a drop in capacity utilisation by 8%. With renewable energy picking up on the side, there is not much chance of coal-powered generation picking up.

However, renewable energy proponents claim the rising number of coal plants prevents other energy sources from selling electricity on the grid, as a result of which many wind, water and solar projects stand discarded. Local governments in their attempt to maintain stability and employment give all the coal plants adequate market share to survive, note critics.

Utility contracts guarantee that coal-fired plants operate a minimum number of hours to sell power to the grid, while renewable sources have no such guarantee, reports the New York Times.

Impact of coal power

In terms of impact, the yearly carbon emissions from the 155 new plants would be around 560 million tonnes a year or 6% of China's current emissions and 1.4 times the nation's annual emissions over the 24-year operating period of the plants.

The toxic particulate emissions would be more than that of all cars in four of China's top cities. Along with sulphur and nitrous oxide emissions these will result in 6,000 premature deaths every year or 150,000 deaths over the 24 years, says the report.

China is already the biggest emitter of greenhouse gases in the world and has seen some of the worst air pollution cases globally. Energy related emissions comprise a major chunk of global emissions.